Protesters rally against bailout in Cyprus

Protests break out as head of country's biggest commercial bank resigns in opposition to plans to restructure bank.

26 Mar 2013 16:20 GMT

Protesters have marched near the presidential palace in Cyprus, as questions over the bailout package for the financially crippled island linger with the resignation of the chairman of the country's largest commercial bank.

As protesters took to the streets on Tuesday, Bank of Cyprus Chairman Andreas Artemis submitted his resignation opposing plans to restructure the bank, Al Jazeera's John Psaropoulos, reporting from Nicosia, said.

The refinancing and restructuring plan of the Bank of Cyprus requires it to absorb the deposits of another financial institution called Laiki Bank, which has been shuttered.

As banks remained closed nationwide for the second week, an estimated 1,500 protesters gathered in the capital Nicosia to denounce the European Union, European Central Bank and the International Monetary Fund creditors.

The protesters, many of them students who organised the event online, were cheered on by government workers as they marched past the labour ministry.

"Troika out of Cyprus," said banners held by the angry students, in reference to the three creditors.

"Hands off Cyprus," and "Those who stole our money should go to jail and pay," chanted the demonstrators.

Cyprus secured a deal with international lenders on Monday for a $13bn bailout that helped it avert bankruptcy, but which will see large deposit-holders at its two biggest banks losing much of their savings.

The bailout involves depositors in the two biggest banks paying huge levies on deposits more than $130,000. It also effectively shuts down Laiki, the island's second-largest lender also known as Popular Bank.

The country's finance minister Michalis Sarris also conceded that big depositors could lose as much as 40 percent of their funds.

On Tuesday, Cypriots woke to find banks under lockdown for an 11th day after authorities reversed course and kept them closed to prevent a run on deposits following the bailout.

Greek precedent

Our correspondent John Psaropoulos said that despite the bailout package, citizens were "extremely worried" about the medium and long-term economic health of the country.

Psaropoulos said people were concerned about "the Greek precedent" of a weak economy and high unemployment.

Our correpondent also said the resignation at the Bank of Cyprus "taps into the major concern" whether the bank can absorb the assets and liabilties of the shuttered Laiki Bank and remain solvent.

The student protest will be followed by a leftwing anti-austerity demonstration organised by the communist Akel party for 16:00 GMT on Wednesday outside the presidential palace.

"We don't know what our future is, and we are angry that it will not stop at those measures," said one of the youths who only gave his name as Christos, 16. "This why we... came out to express our opinion."

The bank closures have hit businesses, which have found themselves unable to pay suppliers or fulfil orders. The retail market is sharply down too, shop owners say, with customers unwilling to spend on anything but the basics while they have limited access to cash.

"The continuation of this uncertainty is pushing the economy deeper into recession, but we're hopeful once this situation is sorted out, the market can rebound quickly,'' said Michalis Pilikos, head of a business group.